The Ontario market will likely see a great deal of volatility in the coming months, as it faces the ‘payback’ effect of the earlier gains related to buyers advancing their purchases to ‘beat’ the HST, new mortgage rules and anticipated rises in mortgage rates.
Consequently, we expect generally weak resales in the second half of 2010, with further monthly declines likely in the near term.
Pricing momentum is decelerating rapidly in Ontario, because much of the steam has run out of the market by now. With demand slowing down and the surge in new listings earlier this year having boosted the supply of homes available for sale, buyers presently have plenty of choice before them and, as a result, are gaining back some bargaining power. In our view, this will severely limit home price increases in the near term. That being said, the likelihood of outright declines is generally low because the market is expected to remain reasonably balanced. Any further drop in demand will be matched by reductions in supply (i.e., listings).
-Robert Hogue, Senior Economist at RBC, August 11th.
Since August 11th, mortgage rates have dropped by approximately 50 basis points on 5 year fixed rates. The Toronto Real-estate numbers for SEPTEMBER, and OCTOBER, will be a great barometer into the health of the Canadian Economy.
If prices surge, on lower rates, that’s good news. Anything but that, will be a troubling sign. Gauging by my unofficial polling of people who say things like …
“I’m holding off, the housing market is going to cool off soon”,
compared against the lack of people saying things like
”I would really like to move, but I just can’t sell my home for enough money.”
I’m willing to bet on surprises to the upside for price action in the second half of 2010. Time will tell.